Joint owner A submitted a Reg E error notification, claiming that joint owner B took A's debit card without permission and used the debit card information to pay for 3 things purchased through B's Amazon account.

There is no indication that B used A's debit card for other purchases previously, so this doesn't look like an authorized user going beyond the scope of the authority given for the use of an access device. Also, A and B do not live in the same place, so it is unlikely that A received a benefit from B's Amazon purchases. If it wasn't for the fact that B is a joint owner of the account, we'd be crediting the account for these transactions without further investigation.

The business line has concerns about doing the credit, because it seems odd to say that we have to give credit for transactions that were definitely made by an account owner, just because B used A's debit card instead of using B's debit card for the transactions.

I don't see anything in Regulation E that excepts unauthorized transactions when they're made by another owner of the account. Does anyone know of something that I'm missing?

Owner B has full rights and access to the funds in the account. It's no different if B walked into a branch and emptied the account. These are authorized EFTs initiated by the rightful owner of an account.

Makes sense to me, from a logic perspective, but is there anything in Reg E that I can point to supporting that? Everything I see in there just talks about consumers and access devices on the individual level; nothing about joint owners being automatically presumed to be authorized if they use the other joint owner's access device, or anything like that.

An access device (debit card) is issued to the account. Whether or not one or the other of the owners has their name embossed on the card really does not mean a thing.

You aren't going to find that specifically stated in Reg E, because it isn't there. The access device is simply the vehicle used to access the funds in the account. A and B both have equal access to the balance of the account. B cannot steal what is rightfully theirs. B cannot fraudulently authorize a transfer from his/her account.

“Unauthorized electronic fund transfer” means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer.

The joint owner is authorized to conduct transactions on the account, including initiating EFTs from the account. The cardholder may not have authorized them to use the card for these transactions, but the joint owner still has actual authority to initiate transfers.

Logically, I'm right there with you. My stumbling block is that owner B did not have actual authority to initiate the transfers in question, because the access device used to initiate the transfer was issued to owner A, and only owner A has the authority to initiate transfers using that access device.

So yes, B has authority to initiate transfers in general. But she did not have authority to initiate transfers using that access device, and I'm not seeing anything supporting the idea that having general authority means anything from a Reg E perspective.

I think there's a good argument based on the wording of Reg. E. It says "without authority to initiate the transfer." It doesn't say "without authority to use the access device." Also, I'd bet your account agreement includes something like this "Any joint owner is authorized and deemed to act on behalf of all other owners."

Ooh, I like that! I'll go with the "authority to initiate the transfer" phrase as applying to the account in general, rather than authority to use the specific access device. Thanks!

Deny the claim. Excellent discussion above but the bottom line is the funds were not taken by an unauthorized person, it was an account owner. An account owner has full rights to all the funds.

You might also consider not re-issuing. This is an argument the bank shouldn't be in the middle of. If A claims B was only there as an estate planning or emergency contingency, it was a bad solution.

Learned Hand --

A and B have a joint account. A likes blue checks; B likes yellow checks. They each order checks for the account in their preferred color scheme. A's checks don't have B's name printed on them. B's checks don't have A's name printed on them. Both A and B have their pay and Social Security payments direct deposited to the joint account.

A runs out of his blue checks, so he takes a yellow check from B's checkbook and uses it to buy a new iPhone at BestBuy. When B learns of the purchase four days later, she calls the bank to stop payment on the check, saying that A didn't have a right to use B's check, but is (correctly) told that the check was paid two days before she called, and payment cannot be stopped.

Was the check correctly paid by the bank? Was the bank right to refuse the stop payment request? Does B need to learn about how a joint account works? Do A and B need counseling? Should they be looking for another bank next week?

I'd answer "Yes" to all those questions -- the last one because their current bank should be showing them the exit sign.